Market Place; A Coke executive will leave his job in the wake of a rigged market test at Burger King.

By SHERRI DAY

Published: August 26, 2003

IN an effort to end an embarrassing chapter in its domestic business, the Coca-Cola Company said yesterday that the head of its fountain division had agreed to step down.

The executive, Tom Moore, who had served as president of Coke's Foodservice and Hospitality Division since 1999, led the division when it rigged a marketing test for Coke products sold at Burger King. Mr. Moore, 46, will continue to work at the company in a transitional role for an undetermined amount of time, the company said.

''It's something that Tom had been deliberating on,'' a Coke spokesman, Dan Schafer, said. ''As he reflected on the events, he felt that change was necessary to avoid distractions and move the business forward.''

The move, which was anticipated, ends weeks of speculation about who at Coke would be held responsible for what became a very public and distressing episode. In June, Coke executives said that employees in its fountain division had paid a Virginia man to take hundreds of children to Burger King to buy value meals and Frozen Cokes, a slushy drink that was being promoted in Burger King restaurants. An increase in sales of Frozen Cokes, Coke employees reasoned, would encourage Burger King to invest more money in the product and the equipment used to make it.

To make amends with Burger King, Coke agreed earlier this month to pay the company and its franchisees up to $21.1 million for equipment expenses and promotions.

Despite Coke's role in the Burger King incident, the company has managed to hold onto its contract with the restaurant chain and maintain the confidence of investors on Wall Street. Most investors, analysts said, do not think that Coke is guilty of the accusations that have been made against it. Shares of Coca-Cola rose 79 cents, or 1.8 percent, to $44.07 yesterday on the New York Stock Exchange.

Executives at Coke announced Mr. Moore's demotion, which is effective immediately, yesterday morning in an internal memorandum to its employees.

''There was an inevitability to some kind of sacrificial lamb,'' Marc Greenberg, a beverage and tobacco analyst at Deutsche Bank, said. ''Typically in these situations, a mishap like this results in senior management casualty. I don't think this bears directly on Tom personally, but he was the guy at the helm of that business when all of this happened and, as a result, a change needed to be made.''

Mr. Moore will be succeeded by Chris Lowe, who has been at Coke for 14 years and most recently served as the chief marketing officer for the company's North American business.

Javier Benito, who is president of Coke's Nordic division, will assume the position of chief marketing officer, the company said.

Analysts said that Mr. Moore had to step down because his leadership had been tainted by the Burger King scandal. Even so, analysts said Mr. Moore's legacy should reflect more than the controversy that ultimately engulfed his career at Coke.

''Tom Moore helped enable Coke to maintain its huge fountain-share lead in the face of an onslaught from Pepsi against that part of its business,'' said John D. Sicher, the editor and publisher of Beverage Digest, an industry publication.

Earlier this year, Matthew Whitley, a former Coke employee, named Mr. Moore in a wrongful termination lawsuit filed against Coke. According to the lawsuit, Mr. Moore knew about the rigged promotions at Burger King but did not alert Burger King or fire the employees who manipulated the marketing test.

While Coke appears to have sidestepped the Burger King situation, the company still faces several legal hurdles. Mr. Whitley's wrongful termination lawsuit is pending. A federal grand jury is seeking information from Burger King about the accusations in the lawsuit. In addition, Coke is being investigated by federal prosecutors in Atlanta.

Earlier this month, the Lancer Corporation, which supplies Coke with beverage equipment, said federal prosecutors had asked it to provide information about its dealings with the company.

Coke, meanwhile, has filed a motion to dismiss Mr. Whitley's lawsuit. The judge in the case is expected to issue a ruling on that motion this week.